M/S. COIMBATORE TRADERS,, vs. THE INCOME TAX OFFICER,

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WP(C)/15136/2022HC KeralaKLHC01030401202219 September 2023Bench: HONOURABLE MR. JUSTICE D. K. SINGH6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the petitioner's contention that their reply was not considered was not supported by the record, as admissible deductions had been allowed during the assessment proceedings. The Court found that the petitioner had been given an opportunity to reply and had done so, thus not violating the principles of natural justice. The Court further held that a writ petition under Article 226 of the Constitution of India is not the appropriate forum to challenge an assessment order when a statutory alternate remedy of appeal under Section 246 of the Income Tax Act exists. Therefore, the writ petition was dismissed. However, the Court granted liberty to the petitioner to approach the appellate authority with an application for condonation of delay, suggesting that the appellate authority may condone the delay given the pendency of the writ petition. If the delay is condoned, the appellate authority was directed to decide the appeal on merits expeditiously.

What were the facts?

The petitioner, M/s. Coimbatore Traders, a partnership firm dealing in vehicle body building products, filed a writ petition challenging an assessment order dated June 30, 2021, passed by the 2nd respondent (National E-Assessment Centre, Delhi) for assessment year 2017-18. The petitioner had not filed an income tax return for the said year. A notice under Section 148 was issued, followed by a notice under Section 142. The petitioner filed replies to both. The assessment was finalized, assessing the petitioner to tax of Rs. 1,45,000/-, noting a significant cash deposit of Rs. 2,31,23,940/- in FY 2016-17 despite no return being filed. The petitioner contended that their replies were not considered.

What were the issues?

1. Whether the assessment order dated June 30, 2021, passed by the 2nd respondent for assessment year 2017-18, is liable to be quashed on the ground that the petitioner's replies were not considered, thereby violating principles of natural justice? (Question of law and fact, relating to Section 142 and principles of natural justice). Assessee's Contention: The petitioner argued that their reply to the notices issued during the assessment proceedings was not taken into account by the assessing authority. Revenue's Contention: The revenue contended that the petitioner's submission that their reply was not considered was not borne out by the record, as admissible deductions had been allowed. Furthermore, the revenue argued that the High Court should not entertain a writ petition under Article 226 against an assessment order when a statutory alternate remedy of appeal under Section 246 of the Income Tax Act is available.

Which sections of the Income-tax Act were involved?

Section 148,Section 142,Section 139,Section 246

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945 WP(C) NO. 15136 OF 2022 PETITIONER: M/S. COIMBATORE TRADERS,, 34/360, KOKKALAI, THRISSUR-680 021, REPRESENTED BY ITS MANAGING PARTNER, V.MUHAMMED RIYAS. BY ADVS. HARISANKAR V. MENON(K/700/1997) MEERA V.MENON RESPONDENTS: 1 THE INCOME TAX OFFICER, AAYAKAR BHAVAN, ST NAGAR, THRISSUR-680 001. 2 THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, DELHI-110 001. BY ADVS. P.K.RAVINDRANATHA MENON (SR.) JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA ADV.JOSE JOSEPH-SC-IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WPC No.15136 of 2022 2 JUDGMENT Dated this the 19th day of September, 2023 1. Heard Ms.Krishna K, learned counsel for the petitioner as well as Sri.Jose Joseph, learned Standing Counsel appearing for the respondents 2. The present writ petition has been filed under Article 226 of the Constitution of India challenging Ext.P3 assessment order dated 30.06.2021 passed by the 2nd respondent for the assessment year 2017-18. 3. The petitioner is a partnership firm engaged in the trading of vehicle body building products like aluminium composite panel, automobiles spare parts and accessories, cables, glasses, plywoods etc. The petitioner did not filed income tax return for the assessment year 2017-18. The petitioner was issued notice under Section 148 of the Income Tax Act, to which petitioner filed reply and thereafter notice under Section 142 was

WPC No.15136 of 2022 3 issued. The petitioner also filed reply to the 142 notice. After considering the reply, the assessment proceedings were finalised by the impugned order and the petitioner has been assessed to the tax of Rs.1,45,000/-. The assessing authority has noted that the petitioner did not file the return of income under Section 139 of the Income Tax Act despite huge cash deposit in the financial year 2016-17 of Rs.2,31,23,940/-. 4. The learned counsel for the petitioner submits that the petitioner’s reply has not been taken note of. Such contention is not worn out from the record inasmuch as the admissible deductions had been allowed while finalising the assessment proceedings. Once the petitioner was given opportunity and filed reply to the show cause notices, it cannot be said that there was violation of the principles of natural justice. The High Court should not be approached under Article 226 of the

WPC No.15136 of 2022 4 Constitution of India against the assessment order passed under the provisions of the Income Tax Act. There is a statutory alternate remedy of appeal under Section 246 of the Act. To avoid the remedy of appeal, the present writ petition has been filed. 5. This Court does not find any ground to entertain such a writ petition, and therefore, this writ petition is dismissed. However, if the petitioner approaches the appellate authority against the assessment order with the application for condonation of delay, the appellate authority may condone the delay inasmuch as the petitioner had approached this Court with this writ petition on 22.04.2022 and it has remained pending on the file of this Court till today. If the delay is condoned, the appellate authority should proceed with the appeal on merits and decide the same, expeditiously, in accordance with law.

WPC No.15136 of 2022 5 6. With the aforesaid liberty, the present writ petition stands finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE AP

WPC No.15136 of 2022 6 APPENDIX OF WP(C) 15136/2022 PETITIONER EXHIBITS Exhibit P1 COPY OF NOTICE ISSUED BY THE 1ST RESPONDENT. Exhibit P2 COPY OF RETURN OF THE PETITIONER FOR THE YEAR 2017-18. Exhibit P3 COPY OF NOTICE ISSUED BY THE 1ST RESPONDENT. Exhibit P4 COPY OF E RESPONSE ACKNOWLEDGEMENT. Exhibit P5 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT. Exhibit P6 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT. Exhibit P7 COPY OF E RESPONSE ACKNOWLEDGEMENT. Exhibit P8 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT. Exhibit P9 COPY OF ADJOURNMENT DETAILS FROM THE PORTAL OF THE INCOME TAX DEPARTMENT. Exhibit P10 COPY OF LETTER SUBMITTED BY THE PETITIONER WITH ACKNOWLEDGEMENT. Exhibit P11 COPY OF ORDER ISSUED BY THE 2ND RESPONDNET FOR THE YEAR 2017-18. Exhibit P12 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT. Exhibit P13 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT.

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